Britain is to offer 100-year gilts, meaning current Government borrowing will
not be repaid until the next century, under a radical plan to be unveiled by
George Osborne in next week's budget.

The Chancellor hopes that the 100-year gilts will help to "lock in" the benefits of Britain's international "safe haven" status. The interest rates paid by the Government to borrow money have recently fallen to a record low and it is hoped the new gilts will mean "our great-grandchildren" can benefit from the low rates.

Similar gilts have only previously been used to fund the First World War and the fallout from the South Sea Bubble, when speculators almost bankrupted the global economy. The Exchequer is still paying interest on those loans, underlining the scale of the economic crisis now facing the country.

Currently, the average duration of the Government's £1 trillion debt is around 14 years – with maturities ranging from months to a 50-year bond issued in 2005. Longer-dated debt is widely thought to offer a country more stability.

A Treasury source said tonight: "This is about locking in for the future the tangible benefits of the safe haven status we have today. The prize is lower debt interest repayments for decades to come.

"It is a chance for our great-grandchildren to pay less than they otherwise would have done because of the government's fiscal credibility."

However, the scheme is likely to be attacked by Labour for saddling future generations with today's debts.

Mr Osborne is expected to launch a consultation alongside next week's budget on the 100-year gilts. A plan for never-ending gilts is also likely to be considered. The schemes are only likely to be used for a minority of gilts.

Separately, the Government is expected to launch its £20bn credit easing scheme to underwrite cheap loans to small and medium sized companies, next Tuesday – the day before the budget.